Weight Watchers' stock crashes 30% after posting disappointing guidance
Shares of Weight Watchers (WTW) slumped after the company posted an outlook for fiscal 2019 that fell well below consensus expectations.
The weight management and wellness company said it expects adjusted earnings to fall in the range of $1.25 to $1.50 per share for the full year, below expectations of $3.36 per share, according to Bloomberg-compiled estimates. The company sees full-year revenue of $1.4 billion, versus Wall Street’s expected $1.66 billion and the company’s full-year 2018 revenue of $1.5 billion.
Weight Watchers reported fourth-quarter earnings per share of 63 cents, or three cents ahead of expectations. Sales of $330 million, however, came in short of expectations of $346.4 million.
The stock declined 34.38% to $19.41 per share as of about 4:36 p.m. ET, the largest percent drop on record, albeit after market close.
“While we are disappointed with our start to 2019, we are confident that our strategy to focus on providing holistic wellness solutions leveraging our best-in-class weight management program is the right path to support long-term sustainable growth,” CEO Mindy Grossman said in a statement.
Weight Watchers was hit by a "perfect storm" in the fourth quarter, Grossman told Yahoo Finance in a phone interview. The company felt a hit from tough prior year comparisons to a strong launch of its new Freestyle program and an ineffective new marketing campaign in the fourth quarter.
Grossman conceded the company’s 2019 outlook is tantamount to an "earnings reset" and that she isn't happy with the fourth-quarter results and soft start to 2019. She promised business trends will improve sequentially and noted member retention remains at all-time highs.
New member recruitment for the year, however, is expected to come in below 2018 levels, contributing to the lower earnings and sales projections for the current year, CFO Nick Hotchkin said in a statement.
“We are focused on driving member recruitment and exercising strict cost discipline, while continuing to invest in the areas that will drive future growth,” Hotchkin said.
Weight Watchers will move forward with a new TV and digital marketing program with brand ambassador and major shareholder Oprah Winfrey this spring. Grossman also hinted at special live events with the TV and movie icon in order to help jumpstart business.
Trading was halted for the stock ahead of the quarterly earnings report, which was released at about 4:05 p.m. ET. Trading resumed at 4:35 p.m. ET.
Brian Sozzi contributed to this report.
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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